A third-party claimant (injured party, not the insured) is represented by an attorney and demands a settlement of $150,000 for a soft-tissue auto injury. The adjuster's evaluation indicates the case is worth $40,000-$55,000 based on medical specials, lost wages, and comparable verdicts. How should the adjuster proceed?

NEGOTIATING WITH REPRESENTED CLAIMANTS requires balancing good-faith claims handling with sound valuation principles.

Key principles:

Evaluate independently: the adjuster must evaluate the claim based on its own merits (medical records, treatment, prognosis, documented income loss, comparable verdicts in the jurisdiction) — not based on the attorney's demand.

Make a reasoned offer: if the claim has value, the adjuster should make a documented, reasonable offer that reflects the fair value of the claim.

Document reasoning: the offer and the reasoning behind it must be documented; if the case litigates, this documentation shows good faith and supports the evaluation.

Negotiate in good faith: going back and forth between positions is normal and expected in settlement negotiations; the demand will typically drop over time if well-supported by the evaluation.

Authority levels: adjusters typically have settlement authority up to a certain dollar amount; larger cases require supervisor or special authority.

When to involve defense counsel: if a lawsuit is filed, defense counsel is retained and takes over settlement communication.

Soft tissue considerations: soft tissue injuries (whiplash, muscle strains) are common in auto claims; they are often subject to significant range of values based on: treatment duration and type; pre-existing conditions; credibility of complaints; jurisdiction (some jurisdictions are 'plaintiff-friendly' with higher verdicts); policy limits (limits the maximum exposure).

Note: paying clearly inflated demands just to 'avoid litigation' could itself be a misuse of insurance funds; failing to evaluate and negotiate in good faith is bad faith. The adjuster's fiduciary duty is to both the insured (protecting them up to policy limits) and to the insurer (sound stewardship of funds).